LIBOR transition

NEW ACT BORROWER'S GUIDE TO THE LMA'S RECOMMENDED FORMS OF FACILITY AGREEMENT FOR LOANS REFERENCING RISK-FREE RATES

April 2021

On 30 March, the LMA published finalised versions of its forms of facility agreement for loans referencing RFRs as part of its library of recommended forms (the RFR templates). The new templates, which have been in circulation for some time as exposure drafts, were published just in advance of the 31 March deadline set by the Working Group on Sterling Risk-Free Reference Rates for the cessation of sterling LIBOR loans extending beyond the end of 2021. The RFR templates reflect the recommendations of the Working Group on Sterling Risk-Free Reference Rates and familiarity with their terms is essential for all market participants.

The terms of the RFR templates are materially different to loans on LIBOR terms. To assist treasurers approaching RFR-linked loans for the first time, we have produced for the Association of Corporate Treasurers, a Borrower’s Guide to the LMA’s RFR templates. This new Guide provides essential background to RFR lending terms from the borrower’s point of view, alongside a detailed commentary on the interest rate and related provisions of the RFR templates, highlighting the aspects that borrowers might seek to adjust or negotiate.

OUR TRANSFORMING INTEREST RATE BENCHMARKS SERIES

(L)IBOR Transition: Headlines and deadlines

30 2697

This briefing contains a reminder of some key headlines and deadlines, covering the approach to LIBOR transition in English law loans, bonds and derivatives, and some of the more recent communications …

Transition to synthetic LIBOR by statute

31 2703

The scope of application of synthetic LIBOR and the effect of The Critical Benchmarks (References and Administrators’ Liability) Bill for treasurers.

FCA LIBOR Cessation Announcement

32 2701

Key points of the FCA’s announcement, which has repercussions for all contracts and instruments referencing LIBOR

ACT Guide to LIBOR 2020

29 2699

Our Practical Guide to LIBOR transition, prepared for the ACT, provides a starting point for finance and treasury teams transitioning LIBOR-referencing financial products to alternative rates. It cont …

Managing LIBOR Derivatives

30 2697

FAQs for Corporate Treasurers

Future-proofing LIBOR-referencing loans

31 2703

We look at the new LMA drafting and include a checklist of issues that borrowers will need to work through if entering into a LIBOR loan that converts to a risk-free rate (RFR) in the future

Negative interest rates in a post-LIBOR world

32 2701

The implications of falling and potentially negative central bank rates for interest payment obligations that reference either LIBOR or the risk-free rates designed to replace it

Transition from LIBOR continues

29 2699

A summary of what has been happening in the world of risk-free rates while treasury functions may have been dealing with more immediate challenges

LMA's Compounded Rates Facilities Agreements

30 2697

Key features of the Loan Market Association’s Exposure Drafts of particular interest to borrowers

Ready for risk free rates?

31 2703

Reasons for the differing pace of transition to RFRs between asset classes and how RFRs are starting to be used in mainstream financial products

Developments in euro land

32 2701

EONIA, the overnight rate for euro is being discontinued which means deals will need to be transitioned to an alternative rate

The end of LIBOR

29 2699

The progress towards transition from LIBOR and the methods currently under discussion for referencing RFRs in place of LIBOR

Matthew Tobin Partner

Oliver Wicker Partner

Richard Jones Partner

Jan Putnis Partner

Kathrine Meloni Special Adviser and Head of Treasury Insight

Latifah Mohamed Senior PSL

Jessica Brodd Senior PSL